Buying a house - Now or 18 months time
Discussion
Sharted said:
kingston12 said:
That's true, but I can understand the OP's dilemma.
Say he buys a place now at £500k on a 2% mortgage, interest rates go up and that sends prices down to £400k in 18 months time. He'd end up with an extra £100k to pay off, and he'd be doing so at a higher interest rate.
I am not saying that will happen (in fact I think it is extremely unlikely), but it must be a decision factor.
Where did the extra £100k debt appear from?Say he buys a place now at £500k on a 2% mortgage, interest rates go up and that sends prices down to £400k in 18 months time. He'd end up with an extra £100k to pay off, and he'd be doing so at a higher interest rate.
I am not saying that will happen (in fact I think it is extremely unlikely), but it must be a decision factor.
I'd go ahead and buy now as prices should hold up in London, imo. But make sure you could pay a 5% mortgage, even if it meant you had to cut back on everything else.
Most people agree that interest rates will remain low for a decade or more, but 5% is low - see this graph if you don't believe me http://www.tradingeconomics.com/united-kingdom/int...(Click on Max timescale)
Most people agree that interest rates will remain low for a decade or more, but 5% is low - see this graph if you don't believe me http://www.tradingeconomics.com/united-kingdom/int...(Click on Max timescale)
Edited by -Pete- on Tuesday 7th February 16:33
Prohibiting said:
^good advice there above.
I'm in the same situation as you. Don't know whether to buy now or wait it out 6 months.
What they said. It can be street specific in London. New build especially high density could be quite volatile, older stuff particularly houses (per OP) "may" hold up better. There really is no correct answer, without understanding OP completely. It's an expensive area, so caution advised; best advise may be the old "worst house on a good street.."I'm in the same situation as you. Don't know whether to buy now or wait it out 6 months.
I spent about 6 months looking for a property to buy and my experience is as follows :
Surbiton - Lots and lots of flats for sale that are not selling around the £400k price range. The "put it on for £50K more than the last one sold for" tactic is not working anymore and there are lots of reductions on the rightmove website. I looked at a flat in a block of 20 for £410k in November and it is still for sale along with another 2 now. Basically the changes to the Buy To Let tax and stamp duty have killed the market as the sums do not add up anymore. Plus, the rental income needs to cover the mortgage payments assuming an interest rate of 5.5% which means you need a massive deposit these days.
Hampshire - Very little for sale, so little infact that I don't really know how estate agents sell enough to keep going. Houses here are still affordable compared to Surrey (£300k - £350k for a 3 bedroom house) and from what I can see houses in this price range are still selling. I would however say that prices have remained pretty static over the last six+ months.
Halifax figures just released for January show a -0.9% fall, my gut feel is that reasonably priced properties are still selling but overpriced flats and larger properties are struggling.
I got a 5% deduction on the asking price of the property I bought in Hampshire which I was happy about, but then I am effectively a first time buyer with nothing to sell. I think I got a good deal but on the survey the "What is the chance of selling for this price in the current market" question was answered as "Fair" by the surveyor, not sure if that shows much confidence in the market.
Surbiton - Lots and lots of flats for sale that are not selling around the £400k price range. The "put it on for £50K more than the last one sold for" tactic is not working anymore and there are lots of reductions on the rightmove website. I looked at a flat in a block of 20 for £410k in November and it is still for sale along with another 2 now. Basically the changes to the Buy To Let tax and stamp duty have killed the market as the sums do not add up anymore. Plus, the rental income needs to cover the mortgage payments assuming an interest rate of 5.5% which means you need a massive deposit these days.
Hampshire - Very little for sale, so little infact that I don't really know how estate agents sell enough to keep going. Houses here are still affordable compared to Surrey (£300k - £350k for a 3 bedroom house) and from what I can see houses in this price range are still selling. I would however say that prices have remained pretty static over the last six+ months.
Halifax figures just released for January show a -0.9% fall, my gut feel is that reasonably priced properties are still selling but overpriced flats and larger properties are struggling.
I got a 5% deduction on the asking price of the property I bought in Hampshire which I was happy about, but then I am effectively a first time buyer with nothing to sell. I think I got a good deal but on the survey the "What is the chance of selling for this price in the current market" question was answered as "Fair" by the surveyor, not sure if that shows much confidence in the market.
snotrag said:
Has everyone forgotten that the primary function of a house is... somewhere to live?
What a foolish notion, everybody knows that owning pwoperdy is the same as having your very own cash machine. You only have to watch property ladder, homes under the hammer and all the other property porn to realise it is a licence to print money.Joey Deacon said:
I spent about 6 months looking for a property to buy and my experience is as follows :
Surbiton - Lots and lots of flats for sale that are not selling around the £400k price range. The "put it on for £50K more than the last one sold for" tactic is not working anymore and there are lots of reductions on the rightmove website. I looked at a flat in a block of 20 for £410k in November and it is still for sale along with another 2 now. Basically the changes to the Buy To Let tax and stamp duty have killed the market as the sums do not add up anymore. Plus, the rental income needs to cover the mortgage payments assuming an interest rate of 5.5% which means you need a massive deposit these days.
This is exactly what I am seeing in Surbiton - it is strongest in the part of the market that you mention, but also higher up. The 'nice' 2 bed flat market down by the river which had quietly bubbled it's way up to £600k+ has totally stalled and the small houses on the same roads that were the subject of furious bidding wars at £800k last year are now sitting on the market for months at less than that.Surbiton - Lots and lots of flats for sale that are not selling around the £400k price range. The "put it on for £50K more than the last one sold for" tactic is not working anymore and there are lots of reductions on the rightmove website. I looked at a flat in a block of 20 for £410k in November and it is still for sale along with another 2 now. Basically the changes to the Buy To Let tax and stamp duty have killed the market as the sums do not add up anymore. Plus, the rental income needs to cover the mortgage payments assuming an interest rate of 5.5% which means you need a massive deposit these days.
This will be compounded by a very developer-friendly council meaning that new flats are being thrown up as quickly as possible - thousands in Kingston a mile away but quite a lot of infill in Surbiton itself.
I don't really have it in me to feel sorry for buy-to-let investors, but if I did I probably would feel that way for those invested in Surbiton right now. Even the gross yield is fairly poor - £1,250 for a bog standard, £400k 2 bed flat is under 4% and the new tax rules seems like they will cut out chance of any net yield for a lot of people. None of that mattered when the underlying investment was increasing my 10% a year, but if that stops...
If the OP was asking about buying in Surbiton now or in 18 months time, I'd definitely advise waiting, but closer into London might be a bit different.
gibbon said:
It depends what you a re buying.
If you are buying a commoditised white box newish build flat then comfort yourself by the slight weakness in the market by bidding a few quite low, gauge reactions, there will be numerous for sale.
If you are looking for something harder to replicate repeatedly, be it location, period, design etc, then buy as soon as something you fall in love with becomes available for a price you can afford.
If its the latter, you cant wait, it wont be available in 18 months.
Though, if you phrase the question another way, would I rush in to buying a non perfect property due to a fear of being priced out in the near future? No.
totally agree-saw dream house with wife 10yrs ago thought it might be for sale later on in year ie cheaper then found out from solicitor it went to sealed bids-7 people interested so had to buy at over evaluation but happy I did so as unlikely similar house with land would come up againIf you are buying a commoditised white box newish build flat then comfort yourself by the slight weakness in the market by bidding a few quite low, gauge reactions, there will be numerous for sale.
If you are looking for something harder to replicate repeatedly, be it location, period, design etc, then buy as soon as something you fall in love with becomes available for a price you can afford.
If its the latter, you cant wait, it wont be available in 18 months.
Though, if you phrase the question another way, would I rush in to buying a non perfect property due to a fear of being priced out in the near future? No.
Gassing Station | Finance | Top of Page | What's New | My Stuff